Senators weigh impact of proposed Tricare fee hikes

Mar. 26, 2014 - 06:00AM
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Military advocacy groups appear divided over a Pentagon proposal to consolidate Tricare health programs, but all agree that active-duty families should not have to pay higher medical costs just because they don’t live near a military hospital.

In a hearing before the Senate Armed Services Committee’s personnel panel Wednesday, representatives from four military service organizations addressed the Defense Department’s fiscal 2015 budget proposal to roll Tricare Prime, Standard and Extra into a single consolidated Tricare program.

The plan also would install a new fee structure based on where beneficiaries get their care. Families of active-duty troops would pay new copayments or higher cost shares at network and non-network facilities and retirees and family members would see new fees at military facilities and higher fees elsewhere.

The goal is to encourage beneficiaries to get care where treatment is provided at lower cost to the government.

But the plan would increase costs significantly for military families who have limited or no access to military facilities, according to retired Air Force Col. Mike Hayden, director of government relations for the Military Officers Association of America.

“It’s breaking the faith to change the rules for someone with 10 years — or one year — of service,” Hayden said.

John Davis, legislative programs director for the Fleet Reserve Association, said FRA does not oppose Tricare consolidation but agrees the Pentagon should not shift Tricare costs to beneficiaries, nearly all of whom would see an increase in medical expenses under the plan.

“FRA is concerned that Congress has not learned from past mistakes that pay caps and other benefits cuts impact negatively on retention and recruitment,” Davis said.

Without the estimated $2.1 billion that the benefits proposals would save next year, and with an additional $30 billion in sequester cuts coming over the next five years, readiness and modernization will suffer, said DoD Comptroller Robert Hale.

“These cuts are going to have to come out of readiness and modernization. There’s nowhere else to go,” Hale told lawmakers during the hearing.

The advocacy groups oppose nearly all the proposed benefits cuts in the fiscal 2015 budget, including changes to housing, commissaries and pay increases.

The Tricare proposal, they said, raises the most questions, with concerns over the costs of medical care to personnel on recruiting duty or living far from a military treatment facility, the ability of military hospitals to absorb new patients and the noticeable shortage of physicians nationwide who accept Tricare patients — or even know what Tricare is.

“In this proposal, currently serving families and retirees will pay more and get less,” said MOAA’s Hayden.

Lawmakers said they had concerns over the way the Pentagon was pushing the changes given that the Military Compensation and Retirement Modernization Commission is studying reform of the entire pay and benefits system.

Sen. Lindsey Graham, R-S.C., is an ardent supporter of restructuring the military pay and benefits system to reduce the overall Pentagon budget. But during the hearing, he said decisions to cut programs should wait until the commission issues its recommendations, expected in early 2015.

“It’s not that I don’t trust your work product,” he told Hale and Jessica Wright, acting under secretary of defense for personnel and readiness. “We’ve got ourselves in a bind here. You’ve got a commission studying the same subject matter.”

Graham implored his fellow subcommittee members to find $2.1 billion in other government spending, either within or outside the defense budget, that could be cut to cover the personnel funding gap next year while the commission finishes its work and delivers its final recommendations next February.

Sens. Kirsten Gillibrand, D-N.Y., and Kelly Ayotte, R-N.H., asked whether DoD had studied the impact the proposed changes would have on junior enlisted troops, who would end up devoting a higher percentage of their paychecks to housing, food and health care.

“I assume, because you proposed this, you all ran these numbers and really looked at rank versus how much that person will pay more. And I think that’s really important for us, to see the numbers,” Ayotte said.

Under the consolidated Tricare proposal, retirees would pay to use military treatment facilities, newly Medicare-eligible retirees would pay enrollment fees for Tricare for Life and family members of active-duty troops would pay slightly more for their health care in co-pays or higher cost-shares for some types of care at network and non-network facilities.

The Pentagon estimates the Tricare proposals would save $800 million in fiscal 2015 and $9.3 billion through fiscal 2019.

According to the Pentagon, the average active-duty family’s annual out-of-pocket costs would more than double to $364, increasing the family’s share of its overall health costs from 1.4 percent to 3.3 percent.

The average retiree with two family members now pays $1,376 per year in health expenses; their average contribution would rise to $1,526, or 10.8 percent of the average family’s total annual health care costs.